Justice News

Former Owner Of Defunct Chicago Rush Arena Football Team Arrested On Federal Bankruptcy And Wire Fraud Charges

CHICAGO — The former owner of the defunct Chicago Rush Arena Football League team was arrested today on federal fraud charges for allegedly concealing certain business interests and assets from creditors and overstating his net worth in connection with his purchase and operation of the indoor football team in 2013. DAVID STARAL, JR., was charged with one count each of bankruptcy fraud and wire fraud in a criminal complaint that was filed Friday in U.S. District Court and unsealed this morning following his arrest at his residence in Kenosha, Wis.

Staral, 35, formerly of Chicago, is scheduled to appear at 11:30 a.m. today before U.S. Magistrate Judge Geraldine Soat Brown in Federal Court.

The bankruptcy fraud count alleges that Staral schemed to discharge more than $900,000 in unsecured debt, while concealing from his creditors and the bankruptcy trustee additional businesses he was involved with, income he had received before filing for bankruptcy, and at least two personal bank accounts that he had when he filed a voluntary bankruptcy petition on Jan. 7, 2013. Staral allegedly failed to disclose in his bankruptcy filings his interest in an investment company called Star Julin Equity Partners and testified falsely under oath in a bankruptcy proceeding that he was unemployed and had no occupation after he had just purchased, and was serving as the manager of, the Chicago Rush.

Staral allegedly fraudulently purchased the Chicago Rush when, during purchase negotiations in February 2013, he falsely represented to the Arena Football League’s commissioner that he had a personal net worth of more than $5 million. In fact, Staral had filed for bankruptcy the month before and claimed to have a negative net worth. The purpose of Staral’s scheme was to enable him to purchase the Chicago Rush and benefit financially from ownership, while concealing that he did not have the financial ability to purchase and operate the team, according to an FBI affidavit.

Staral knew the requirements imposed upon him when filing for bankruptcy because he had previously filed a Chapter 7 bankruptcy petition in June 2002, resulting in the Bankruptcy Court discharging approximately $280,000 in debts and providing him with a fresh start, the affidavit states.

In 2012, Staral defrauded two individual investors in separate swindles, the complaint alleges as background. In February 2012, Staral obtained $39,000 from Individual A to use in opening two bars/restaurants in the Chicago area and never made the interest payments he promised or returned the principal, and instead used the money for his own benefit. In September 2012, Staral obtained $50,000 from Individual B and, instead of investing and trading the funds as he promised, Staral used the money to pay down a car loan, to generate cash for himself, and to pay personal expenses, among other things.

When Staral filed for bankruptcy in January 2013, he listed assets totaling $477,901, which were highly encumbered, and liabilities totaling more than $1.35 million, consisting primarily of mortgage and credit card debt and legal judgments against him. (In re David Staral, 13 B 585).

Staral’s bankruptcy filings allegedly concealed two bank accounts, as well as the fact that he had received $50,000 from Individual B and he did not list Individual A as a creditor. He also allegedly concealed his interest in Star Julin Equity Partners, an investment company he formed with Individual A just two months before the bankruptcy filing, Eventmark LLC, the bar/restaurant investment entity he managed, and his prior interest in FoodFunds, Inc. The alleged concealment and false statements prevented the bankruptcy trustee from properly administering Staral’s bankruptcy estate and prevented the trustee and creditors from conducting a proper inquiry into Staral’s assets and ability to pay creditors, the affidavit states.

In negotiations to purchase the Chicago Rush through Star Rush Football LLC, Staral allegedly claimed a personal net worth in excess of $5 million and did not disclose that he had filed for bankruptcy one month earlier, among other things. The commissioner of the Arena Football League told agents that the league would not have agreed to sell the team to Staral had it known about Staral’s alleged misrepresentations.

The charges further allege that Staral deposited approximately $5,000 from the sale of Chicago Rush tickets into his personal bank account and used some of the proceeds to cover personal expenses, including grocery and pharmacy payments, gas stations, and his car loan.

At a Bankruptcy Court creditors’ meeting on March 1, 2013, Staral allegedly made false statements under oath when he was questioned about his bankruptcy filings, knowing that he had concealed certain assets, failed to disclose certain debts, and failed to disclose his purchase of the Chicago Rush, among other things.

The arrest and charges were announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The U.S. Trustee Program’s Chicago office assisted in the investigation.

Bankruptcy fraud carries a maximum of five years in prison and wire fraud carries a maximum of 20 years in prison, and each counts carries a maximum $250,000 fine. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant United States Attorney Matthew F. Madden.

A complaint contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.